Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate change
• Environment and natural resources management
• Financial and private sector development

Environmental Achievements

• The project is expected to help achieve savings of at least 1 million tons of CO2 emissions annually.

Social Achievements

• The sub-projects are expected to sustain economic growth, which will increase employment generation and reduce poverty; and decrease the environmental impact of the energy sector, improving the quality of life and health.

Governance Achievements

• Ukreximbank has a successful track record of lending to industrial companies for energy efficiency projects under a parallel credit line provided by the EBRD.

Climate Goals & Targets

Environmental Challenges

• Ukraine’s credit risk is high.
• Macroeconomic risk is rooted in inappropriate implementation of fiscal and monetary responses; worse than expected external economic environment and terms of trade deterioration; further depreciation of the exchange rate with knock-on effects for corporate and banks; and lower than expected roll-over of private sector external debt.
• Political risks have been high, due to a recent track record of instability.
• Ukraine has historically been one of the least performing World Bank borrowers with extremely low disbursement rates.
• Inadequate capacity of local financial institutions, Ukreximbank as well as industrial and municipally-owned enterprises to implement energy efficiency projects.
• Ukreximbank lending the funds to non-viable industrial or municipal entities.
• Ukreximbank’s capacity is too overstretched to work with different donors.
• Limited capacity of the State Agency of Ukraine for Energy Efficiency and Energy Conservation to process grant funding.
• Inconsistent commercial practices among various sub-borrowers.
• Limited capacity of Ukreximbank to monitor potentially large number of open competitive bidding procedures simultaneously.
• No experience of Ukreximbank in lending to municipal sector.
• Limited procurement capacity in municipal sector.

Mitigation Strategies

• The main mitigant to macroeconomic risk is the framework provided by the IMF program and World Bank DPL program.
• This operation takes the view that political risks are best managed through continued active engagement and the design of a policy operation.
• The skills of the domestic financial sector to assess and supervise energy efficiency projects through financial assessment of energy efficiency activities are emerging across the sector, and have been demonstrated by Ukreximbank.
• Ukreximbank has a track record of successfully implementing energy efficiency projects; Adequate supervision of Ukreximbank.
• The Project team will assist the State Agency of Ukraine for Energy Efficiency and Energy Conservation with technical issues to improve its capacity.
• The project will closely supervise the State Agency of Ukraine for Energy Efficiency and Energy Conservation.
• Clear definition of commercial practices in project Operations Manual; Capacity building within Ukreximbank including procurement procedures of the World Bank to be applied in the municipal sector; Capacity building within Ukreximbank by closely monitoring the first two ICB procedures under the Project; Close cooperation with USAID’s Municipal Heating Reform project; Adequate supervision.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Energy efficiency
• Environmental impact
• Environmental protection
• Social responsibility
• Sustainable development

Environmental Achievements

• Implementation of energy efficiency programs with leading global financial institutions, resulting in modernization of national industry and reduction of carbon dioxide emissions.
• All lending projects undergo environmental impact assessment since 2010.

Social Achievements

• United for Child’s Life charity program raised over UAH 5.3 million to support seriously ill children.
• Ongoing support of specialized children’s institutions in different regions of Ukraine.
• Blood donation and urban greening initiatives by employees.

Governance Achievements

• Successful issuance of USD 600 million Eurobonds, reflecting investor confidence.
• Compliance with Basel 1 and Basel 2 requirements.
• High ratings from Deutsche Bank AG, Commerzbank AG, and Citibank for high-quality settlements.

Climate Goals & Targets

Environmental Challenges

• Global recessionary trends, economic decline, devaluation expectations, and political instability in Ukraine.
• Intense competition in the banking service market.

Mitigation Strategies

• Improved financial condition and growth of key performance indicators.
• Attracting external funds to diversify funding sources and improve liquidity.
• Prudent lending policy with focus on minimizing loan risk and enhancing customer lending support.
• Development of new products and services tailored to customer needs and market conditions.

Supply Chain Management

Climate-Related Risks & Opportunities

Awards & Recognition

• STP Excellence Award (Deutsche Bank AG)
• STP Award 2012 (Commerzbank AG)
• Citi’s Performance Excellence Award (Citibank)
• Friendliest Bank for Big Business (Kontrakty)
• Second in nomination the Most Stable Banks with Ukrainian Capital (Kontrakty)
• Second in Financial Rating in nomination the Most Professional Bank (Business)
• Trade Facilitation Programme Academic Excellence Award (EBRD and ICC)
• 2013 Leader of PR-technologies and Marketing award (Bankir magazine)

Environmental Metrics

ESG Focus Areas

• Environmental Lending

Environmental Achievements

• Approximately EUR 800 million committed by IFIs in EaP countries for environmental credit lines, with a further EUR 500 million in Russia and Central Asia. Annual energy savings of 2,400,000 MWh/yr and GHG emission reductions of more than 500,000 tCO2e across EBRD's SEFF portfolio in the region.
• IFC reports SME financial savings on energy costs of USD 37 million per annum in Russia, equivalent to 1805 GWh per annum and 470,000 tCO2e GHG emission avoidance.

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Weak demand for green investments due to low energy prices, lack of understanding of benefits, and unwillingness to borrow for energy efficiency.
• Weak regulatory environment hindering environmental lending, including lack of supportive policies and inconsistent frameworks.
• Lack of familiarity and capacity among local FIs to develop and manage green financial products.
• Tenor mismatch between balance sheet assets and liabilities for green projects.
• High resource costs for FIs in implementing innovative environmental lending products.

Mitigation Strategies

• IFIs providing long-term financing, concessional interest rates, and technical assistance to support local FIs.
• IFIs working with governments to improve the enabling environment and stimulate demand for green investments.
• Capacity building and training programs for FI staff.
• Incentive payments to end-borrowers to encourage investment in energy efficiency.
• Development of tools and methodologies to support project appraisal and reporting.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Occupational Health and Safety
• COVID-19 Response

Social Achievements

• Improved grievance redress mechanism to address COVID-19 related issues
• Enhanced work practices to enable social distancing and flexible schedules
• Provided access to healthcare facilities for project workers and their families
• Provided detailed advice on COVID-19 prevention and response based on WHO guidance

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impacting SME sector in Ukraine
• Potential for COVID-19 outbreaks on construction sites
• Potential for supply chain disruptions

Mitigation Strategies

• Developed ESMF with procedures for environmental and social assessment
• Implemented COVID-19 prevention measures on construction sites (detailed in Attachment IX)
• Established grievance redress mechanism
• Provided training on COVID-19 prevention and response
• Adjusted work practices to minimize COVID-19 transmission risk

Supply Chain Management

Responsible Procurement

• Requirements for valid operating permits, licenses, and approvals for beneficiary enterprises

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: World Bank OP/BP 4.01 (Environmental Assessment), World Bank OP 4.09 (Pest Management)